Accounts Payable & Receivable
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Aging Analysis Cash Application Collections & Bad Debts Credit Control Invoice Processing Payment Runs Purchase Orders & 3-Way Matching Reconciliations Vendor Management
Accounts Payable & Receivable

Credit Control

22 question(s)

How do deposits and prepayments reduce credit risk?

Intermediate
Requiring a deposit or full prepayment shifts risk to the customer by securing cash before delivery, useful for new, risky, or custom orders. It reduces exposure and improves cash flow, though it can deter customers, so it's targeted at higher-risk situations rather than applied universally.
Real-world example A custom-build order for a new customer requires a 50% deposit, cutting the exposure if they later default.

Common follow-ups: When are deposits appropriate? | What's the downside of demanding prepayment?

Payment Runs Collections & Bad Debts Credit Control

How do you set a credit policy's approval authority matrix?

Advanced
An authority matrix maps credit-limit sizes and risk levels to who may approve them—e.g., analysts approve up to a threshold, managers higher, and executives the largest or riskiest. It enforces segregation and proportionate scrutiny, speeds routine decisions, and ensures large exposures get senior sign-off.
Real-world example Limits up to $25k are approved by the credit analyst, $25-100k by the manager, and above that by the CFO.

Common follow-ups: Why tie approval level to limit size? | How does the matrix speed decisions?

Collections & Bad Debts Payment Runs Credit Control